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1Primeline Corporate Presentation
August 2015
Primeline Energy Holdings Inc.
August 2015
2Primeline Corporate Presentation
August 2015
Building a leading Pan Asia/Pacific oil and gas company
1. TSX-V listed E&P China gas play with clean balance sheet and strong
management team. Year ended Mar 31 2015 cash flow from LS36-1 of CAD$53
million.
2. Merger with Loyz Energy expected to complete by end-2015 to create a
leading Pan-Asia/Pacific E&P company.
3. Enlarged company has production in China and Thailand and exploration
upside in both countries, Australia, the Philippines and New Zealand.
4. $700m+ regional production infrastructure hub in East China Sea in partnership
with CNOOC has secured access to the high price provincial gas market.
5. 2015+ plan to monetise 1TCF+ of high margin hydrocarbon upside in the field
and in our 5,877 km2 exploration concession.
*pro-forma, annualised post PPC acquisition
3Primeline Corporate Presentation
August 2015
Structure and assets
• Acquiring its affiliate Primeline Petroleum Corporation (“PPC”), 100% controlled
by Victor Hwang, PEH Chairman/~70% shareholder. The transaction is expected
to complete imminently. Contractors’ Rights in 2 Petroleum Contracts in the East
China Sea:
• Block 25/34: LS36-1 gas field (85 km2); Operator: CNOOC (51%), Primeline (49%*).
2015 McDaniel Proved + Probable (2P) reserves estimates of 13.2 Mmboe (Gas:
61.3 bcf, Liquids: 3.0 MMbbl).
• Block 33/07: 7 year exploration period of three phases (3, 2, 2 years) from Nov
2012 (5,877 km2). Operator: Primeline (100%*). 600 km2 of 3D in 2014 and 2 wells
planned imminently.
• Contractor responsible for 100% of exploration costs. CNOOC has right to
participate up to 51% in any commercial development by paying pro rata
development/operation costs.
*pro-forma, post PPC acquisition
4Primeline Corporate Presentation
August 2015
East China gas market - High growth, high price
• China’s dynamic economic growth in the past 25 years has created the
world’s 2nd largest energy market.
• China’s current energy needs are met mostly by coal and oil (58% of the
latter is imported) and, insignificantly, by gas at just 5 % of total energy mix.
• Increased gas utilisation has become a focus of Chinese government energy
policy.
• Much of the rapid increase in gas demand in East China is now met by
imports via LNG and long distance pipelines and prices remain strong.
5Primeline Corporate Presentation
August 2015
Access to Zhejiang gas grid
• LS36-1 is a strategic
gas field close to
Zhejiang Province -
population of 50
million
• 4th largest
economy in China.
• Current Zhejiang
gas grid usage is at
~6.6 bcmpa (has
doubled in just 4
years).
• But gas is only 2.8%
of total energy mix.
Ningbo
LNG
6Primeline Corporate Presentation
August 2015
East China Sea becoming a significant gas production basin
• Proven petroleum province.
• New E&P focus in Xihu Trough
(Basin) in northern East China Sea,
anchored on two existing fields:
– Pinghu Field: onstream in 1998,
386 km 14” pipeline to Shanghai
terminal; and
– Chunxiao Field: onstream in 2006,
360 km 28” pipeline to Ningbo
and 4 production platforms.
Expansion development
underway.
7Primeline Corporate Presentation
August 2015
LS36-1: Infrastructure hub is completed
• Platform facility
• 4 development wells
• Subsea pipeline:
126.9km to onshore
terminal
• Sale gas pipeline: 32
km - to grid
8Primeline Corporate Presentation
August 2015
Valuation has not yet reflected impressive operational progress
Dev.
Agreement
Fabrication
Jacket
installedDev.
Drilling
completed
ODP
approved
Production
started
9Primeline Corporate Presentation
August 2015
• Development
completed for LS36-1
gas field, secured
market access and
built regional
production
infrastructure hub.
• High impact
exploration in the
immediate vicinity
and the rest of the
Block anchored
around the
producing LS36-1
facility.
Strategy leverages infrastructure hub to monetize upside
737 km2 of existing 3D seismic data
Newly acquired 600 km2 of 3D
seismic
10Primeline Corporate Presentation
August 2015
High margin resource additions from both our blocks
• 2015+ plan to monetise 1TCF plus of high margin hydrocarbon upside in the
field and in our 5,877 km2 exploration concession.
• Substantial possible reserves and prospective resources in the field itself,
through “phase 2 development drilling”.
• Significant potential in nearby prospects that have been defined by 1300 sq.
km plus of 3D seismic data.
• Additional hydrocarbon potential supported by existing 2D seismic evaluation
along the trend to north adds 2-4 times more gas potential in same play type.
• Seven regional wells in and around the basin have hydrocarbon shows or
flows.
• 2 additional wells to be drilled imminently. LOI for first well – spud date this
month.
11Primeline Corporate Presentation
August 2015
Prospective resources of 1.5TCF (McDaniel)
Prospective Resources - Natural Gas
Prospective Resources - Unrisked (1)Risked (2) Resources
Chance of Success (3)
Prospect Low Medium Mean High Mean
MMcf MMcf MMcf MMcf MMcf %
LS36-1 Paleocene-M1-0 2,745 5,568 6,370 11,101 4,644 73
LS36-1 Paleocene-M1-1 South 1,738 3,963 4,779 8,923 3,484 73
LS36-1 Paleocene-M2 4,858 14,463 19,028 38,761 11,417 60
LS36-1 Paleocene-M3 14,647 31,255 37,104 67,329 25,973 70
LS36-1 Paleocene-L1 8,340 24,177 32,739 67,556 16369 50
LS36-1 Paleocene-L2 2,354 5,321 6,452 11,928 2,581 40
LS30-8 Paleocene-M2 9,375 27,118 35,859 73,134 7,530 21
LS36-1 Development Area (Sub total) 44,055 111,865 142,330 278,733 71,997
LS23-1 Total 29,524 87,135 125,356 264,346 36,475 71
LS23-2 (N) Total 7.315 22,949 33,304 70,501 7,410 27
LS23-2 (S) Total 8,242 27,567 41,496 90,041 8,742 27
LS30-3 Total 37,658 117,429 176,784 381,842 44,740 59
LS29-2 Paleocene-M1-2 18,922 47,291 60,768 118,341 14,584 24
LS29-2 Paleocene-M1-2 7,200 22,516 32,884 71,453 7,103 22
LS35-1 Total 20,340 63,044 97,379 210,657 13,284 25
Block 33/07 3D Seismic Area(Sub total) 129,200 387,931 567,970 1,207,181 132,338
Total (1) 173,255 499,796 710,300 1,485,914 204,335
(1) There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it willbe economically viable or technically feasible to produce any portion of the resources. Total based on an arithmetic aggregation of all the Prospect/Zones and as such there is >90 % chance of exceeding the overall Low Total and <10 % chance of exceeding the overall High Total.(2) These are partially risked prospective resources that have been risked for chance of discovery, but have not been risked for chance of development.(3) L23-1, L23-2N &S and LS30-3 total prospect chance of success takes into account the inter-dependency between zones.
12Primeline Corporate Presentation
August 2015
Additional resources in lower zones
• Current Producers are in M1-1 an M1-2 sands.
• Additional gas in other sands and in lower tight reservoirs.
M11M12
M2
M31M32
L1
L2
Cross-section of LS36-1
13Primeline Corporate Presentation
August 2015
Reserve additions via Phase 2 drilling from platform
Existing wells shown in black
30-8 Exploration Prospect Wells
LS36-1 M2 & M3
wells
LS36-1 M10 well
LS36-1 M11 Sth well
LS36-1 M11 SW well
• 8 locations and well tracks selected as candidates for reserve additions.
14Primeline Corporate Presentation
August 2015
M10 untested sand
• Designed as deviated well
targeted to thick M10
section.
• Well penetrates entire M10
stratigraphic section.
• M10 GIIP calculates with
Prospect Range of:
P90: 6.8 P50: 13.3 P10:
26.0 Bcf
LS36-1 M10
Top M10 3D Horizon
Shaded to show M10 Isochore
Isochore Thickness
15Primeline Corporate Presentation
August 2015
Nearby exploration prospects to the LS36-1 field
• Exploration drilling in 2015
following interpretation of
further 3D seismic of 600 sq.
km which has expanded
coverage of the gas play to
over 1700 sq. km.
• Additional 3D seismic may
be required for the
remainder of the Block
where we have identified
gas leads through 2D seismic;
and to cover the oil play
prospects in the eastern part.
16Primeline Corporate Presentation
August 2015
Lishui gas play tiebacks – 2006 3D seismic area
LS35-1
LS30-3
LS29-2
LS35-3
LS30-3-1
LS35-3-1
Discovery
LS36-1 Platform
17Primeline Corporate Presentation
August 2015
• Phase 1 of LS36-1 generates significant cash flow - Selling into one of the key
provincial economies in China – one of the highest gas price regions in the
world.
• Long term close relationship with CNOOC.
• Management with proven track record & operational expertise.
• One of the very few offshore gas developments in China - with a world class
$700m+ infrastructure hub.
• 2 wells as significant catalysts for 2015 and beyond - 5,877 km2 concession with
~1.5TCF of upside exploration potential to share infrastructure.
• Merger Loyz Energy expected to complete by end-2015 to create a leading
Pan-Asia/Pacific E&P company.
Valuation reflects neither progress to date nor upside potential
18Primeline Corporate Presentation
August 2015
Appendices
Supplementary Technical and Operational Data
Board of Directors
Management and Technical Team
Corporate Structure
19Primeline Corporate Presentation
August 2015
LS36-1: Development schedule
2009 2010 2011 2012 20139 # 11 # 1 2 3 4 5 6 7 8 9 # 11 # 1 2 3 4 5 6 7 8 9 # 11 # 1 2 3 4 5 6 7 8 9 # 11 # 1 2 3 4 5 6 7 8 9 # 11 # 1 2 3 4 5 6 7 8 9 # 11 # 1 2 3 4 5 6 7 8 9
Gas Sales Agreement
Compilation of ODP
Development Agreements & Execution
Revisions of the ODP & EIA approval
Basic Design
Fabrication & installation of Jacket
Fabrication & installation of Topsides
Fabrication & laying of Subsea Pipeline
Laying of Gas Sales Pipeline
Construction of Terminal
Drilling & completion
Joint commissioning
First Gas
Development Activity
Milestone
Development Programme
2008
Critical Path
First production date
2014Activity
Agreement in principle Framework Agreement
20Primeline Corporate Presentation
August 2015
LS36-1: Development milestones
Commercial Agreements
October 2008Gas Sale Agreement-in-principle signed, subsequent Framework and Amendment
Agreements signed in 2011 and 2012
End 2009 Overall Development Program completed
March 2010 Development Agreements signed
Design and Construction
November 2010 Engineering design commenced
August 2011 Procurement and fabrication commenced
March 2012 Site installation commenced
June 2013 Mechanical Completion of platform, terminal & offshore pipeline
July 2014 Development completed and production commenced
Project Finance
July 2010 Loan Memorandum signed
November 2012 Revised Loan Memorandum signed
November 2014 CDB/EXIM/SPDB Project Finance confirmed, signed and drawdown
21Primeline Corporate Presentation
August 2015
Jacket Installation
August 2012Development Drilling
completed April 2013
Topside lifted May 2013,
installation completed June 2013
Development in images
22Primeline Corporate Presentation
August 2015
Onshore Processing Terminal – in operation
Storage
CO2
Processing
Gas
ProcessingSlug
Catcher
Operation &
Fire-fighting
Central
Control
Burner
Loading
Zone
Office &
Living
Lab
23Primeline Corporate Presentation
August 2015
LS36-1: Wells
LS36-1-2LS36-1-1
A3
A1M
A5
M1-0
Mapped Area
Proposed Horizontal Well
A2H
A4P
P
Top M1-2 / M1-1 Merged & M1-0 (Patch) Contoured to GWC (5m CI)
24Primeline Corporate Presentation
August 2015
LS36-1: Production well design
A3
A5
A2H
A1M
• Horizontal and Multi-Lateral
Gas Production wells increase
potential gas rates, especially in tight
gas reservoirs, and increase effective
drainage area.
• A3 drilled as a Vertical well to allow
evaluation of deeper intervals.
Completed over M1-2 interval.
• A1M drilled as 3 branch
Multi-Lateral well in M1-1.
• A2H drilled as 2 branch
Multi-Lateral well in M1-2.
• A5 drilled as Deviated well to M1-1
reservoir.
25Primeline Corporate Presentation
August 2015
Board of Directors
Victor Hwang | Chairman and PresidentMr. Hwang is Executive Director of the publicly listed Hong Kong Parkview Group Ltd., a division of the family
controlled Chyau Fwu Corporation. Parkview's core business includes property development, shipping
transportation and hospitality. He is also President of Parkview International London Ltd - the company that
sold the Battersea Power Station site in Central London for £400M (US$780M) in late 2006. Mr. Hwang holds a
BSc in Business Administration and has significant business and political relationships in China.
Ming Wang | Director and CEO(see Management and Technical Team slide)
Brian Chan | DirectorMr. Chan has extensive experience in international banking and commerce. In addition, Mr. Chan is
General Manager and Director of the Hong Kong Parkview Group Ltd. He is a Certified Accountant.
Alan Johnson | Non-Executive DirectorMr. Johnson has over 30 years’ oil industry experience with various companies particularly in management
and operations in Africa, Russia and China. He was Chief Operation Officer for the Cluff Group of
Companies 1996-2000. He joined Glencore in 2000 as senior upstream oil manager for Glencore worldwide,
looking after projects including a 280,000 bblpd production venture and exploration in Africa and South
America.
26Primeline Corporate Presentation
August 2015
Board of Directors
Peter Kelty | Non-Executive DirectorMr. Kelty has extensive experience in restructuring and financing major Asian regional corporations as well as
advisory work for European and US multi-nationals. Mr. Kelty is a Certified Public Accountant and a member
of the Illinois State Bar. He holds a Masters degree in Business Administration with a major in Accounting and
is a Doctor of Jurisprudence.
Yunshi Cao | Non-Executive DirectorMr. Cao has over 30 years’ oil industry experience in China having retired from CNOOC where he was
General Counsel, Company Secretary and Senior Vice President. Mr. Cao was closely involved In the listing
of CNOOC Ltd., its subsequent operations and fund raisings.
Vincent Lien | Non-Executive DirectorMr. Lien has over 20 years’ experience in the banking industry, specialising in corporate finance and capital
management in Hong Kong, the PRC, Singapore and South-east Asia. Mr. Lien held various senior positions at
major multinational banking institutions including Swiss Bank, Bankers Trust and ABN AMRO. Mr. Lien is
currently a director of various companies including the Maritime & Port Authority of Singapore, Up Energy
Development Group Limited and Focus Media Network Limited. Mr. Lien obtained a Bachelor’s degree in
Business Administration from the University of New Brunswick in 1986.
27Primeline Corporate Presentation
August 2015
Management & Technical Team
Ming Wang | Director and CEODr. Wang He joined Primeline in 1994 and was appointed as Vice President of Exploration in December 1996.
Since then he has been responsible for all technical and commercial operations for Primeline, including the
successful drilling operation of the LS36-1-1 discovery well. Dr. Wang was appointed CEO in 2006. He has
extensive knowledge of, and contacts within, China's petroleum industry. He holds a PhD in Geology from
Imperial College, London.
Stuart Joyner | Chief Financial OfficerMr. Joyner joined in 2014 from Sound Oil where he was CFO and has 22 years' experience in the oil and gas
sector. Prior to industry, he spent 18 years in investment banking for Investec and Credit Suisse, where he
headed sector coverage and previously Morgan Stanley, Dresdner Kleinwort and NatWest Securities. He was
highly ranked as an analyst and specialist salesperson in the Extel and Institutional Investor surveys. He holds
the ACCA Diploma in Accounting and Finance and graduated with an MA (Hons) in German and French
from the University of Edinburgh in 1994.
Andrew Biggs | Senior Vice President and General CounselMr. Biggs joined in 2007 as General Counsel of Primeline and in such capacity he has overseen all legal
aspects of Primeline’s operations. Between 1981 and 1998, he was a partner with international law firm
Richards Butler, both in Hong Kong and London. Mr. Biggs specialised in corporate finance transactions and
was involved in many of the early H-share listings of mainland Chinese companies on the HK Stock Exchange.
In 1998, Mr. Biggs joined Parkview Group as the Corporate Affairs Director. He is qualified as a solicitor in
England and in Hong Kong.
28Primeline Corporate Presentation
August 2015
Management & Technical Team
Alan Soulsby | Technical DirectorMr. Soulsby joined as Technical Director in 1994 and was responsible for the initial block selection and theexploration programme which led to the LS36-1 discovery and ongoing evaluation work. He has had a wide
and varied career in the petroleum industry with over 35 years’ international exploration experience,
including managing Exploration Consultants Ltd. for a number of years and managing many large
integrated exploration and evaluation projects. He graduated from Oxford University with a degree in
Physics in 1970 followed by a Masters in Geophysics.
Brian Thurley | E & P CoordinatorMr. Thurley joined Primeline in 2014 to work with Alan Soulsby to manage the exploration program and
production of the LS36-1 gas field. He has over 35 years’ G&G experience in international oil and gas
exploration and production projects including International Exploration Manager for Monument Oil andGas, technical director for Burren Energy, and technical advisor to Bayfield Energy. Mr. Thurley graduated
from Imperial College, London.
Mark Norman | Project Director and General Manager, China OfficeMr. Norman joined Primeline in 2012 as Project Director for Primeline’s Shanghai office and Vice President in
the Lishui Operating Company - the operator of the LS36-1 development - and in August 2014, he became
General Manager of Primeline’s Shanghai Office. He has over 25 years’ experience in project management
and has expertise in the delivery of complex projects in the UK and worldwide.
29Primeline Corporate Presentation
August 2015
Corporate Structure
Trading Symbols
Outstanding Shares
Fully Diluted Shares
Fully Diluted Proceeds
Balance Sheet @ 31/3/15
Auditor
Major shareholders
PEH - TSX Venture Exchange
178.7M
189.8M
7.2M (C$) C$0.67 average strike price
Total assets C$392.0m/Net assets C$91.6m
Price Waterhouse Coopers
Mr. Victor Hwang (approx. 70%)
Fidelity Worldwide (approx. 7%)
Management (approx. 2%)
Contact
Dr Ming Wang
Chief Executive Officer
mingwang@pehi.com
Andrew Biggs
Senior Vice President
andrewbiggs@pehi.com
Stuart Joyner
Chief Financial Officer
stuartjoyner@pehi.com
30Primeline Corporate Presentation
August 2015
Disclaimer
This information contains certain forward-looking statements within the meaning of applicable securities
laws. Forward-looking statements are often characterized by words such as “plan”, “expect”, “project”,
“intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events
“may” or “will” occur, including without limitation statements related to intended work programs and
associated timelines. Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made and are subject to a variety of risks and uncertainties
and other factors that could cause actual events or results to differ materially from those projected or
anticipated in the forward-looking statements. Such risks and uncertainties include the inherent risks
involved in the exploration for and development of crude oil and natural gas offshore, the uncertainties
involved in interpreting drilling results and other geological and geophysical data, fluctuating energy prices,
the possibility of cost overruns or other unanticipated costs or delays, the risks associated with negotiating
with foreign governments and country risk associated with conducting operations in the People’s Republic
of China and other factors, many of which are beyond the control of Primeline Energy Holdings Inc.
(“Primeline”). Primeline cannot and does not assure that actual results will be consistent with such forward-
looking statements. Forward-looking statements are made as at the date of preparation of this
presentation and are subject to change. Primeline assumes no obligation to revise or update them to
reflect new circumstances, except as required by law. Prospective investors should not place undue
reliance on forward-looking statements.
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